niche | Successful Software

This is a guest post from fellow software developer, Simon Kravis.

It’s sometimes said that software development is only 10% of what’s required to earn money from software and I can attest to that. Since 2018 I have been developing photo captioning and related software, more as a retirement diversion than a serious source of income (after a career mostly involved in writing scientific and engineering analysis software), in the hope that sales income would at least cover running costs. My best marketing tool has been writing reviews of the class of software that I produce, and the hosting site (Hub Pages) provides some useful analytics on how often these are accessed and for how long. Below is the graph for an article on tagging.

The decline since early 2022 is hard to explain – the article is periodically updated so the steady decline is not due to diminishing ‘freshness’ – which for Google is probably a file Modified date.

Here is another review article profile (Scanning Multiple Photos) showing a similar decline:

But another (Best Photo Captioning Software) has held up, though at a low level.

I offer digital photo captioning software (Caption Pro) on Windows and Mac platforms, and an iPhone captioning app (CaptionEdit), with the Windows version dating back to 2017. I also offer part of the functionality of Caption Pro on Windows for auto-cropping scans of multiple paper photos (ImageSplit). On Windows neither Caption Pro software downloads or sales seem to correlate with review accesses, despite about 1/3 of web site accesses coming from the review. However, downloads do show some correlation with Caption Pro web site sessions, as shown in the graph below.

Sales do not correlate with downloads, which perhaps explains why most advertising for niche products is not successful – it may increase downloads but this does not appear to increase sales. The observed proportion of downloads resulting in sales for ImageSplit and Caption Pro are 6% and 9% respectively. The lack of correlation between sales and downloads may be due to the small number of sales per month, which results in random fluctuation dominating the results.

The decision to enter the Apple “Walled Garden” of software was partly at the prompting of friends rather than a commercial evaluation. Apple Developer membership (costing ~US$100 per year) is required to prevent software being blocked from installation through being from an unknown publisher. Further costs were purchasing a fairly modern Mac on which to perform development, as the App Store will only accept software developed using recent versions of the Xcode development environment, which will only run on fairly recent hardware. The App Store takes a commission of 15% on sales, which is quite reasonable when compared to the difficulty of implementing e-commerce on Windows, where a PayPal account eases the problem of low-value foreign-currency transactions, but e-commerce plug-ins may stop working after years for no discernible reason. The review process for software acceptance into the App Store is generally fast, but seemly trivial issues can require resubmission. Features which have passed one review may be rejected in a later one. The review process is generally fast, but on one occasion took 4 weeks.

Caption Pro for Mac has been available (via the App Store) only since Sep 2021.It appears within the top 6 results for a search using “Caption Photos”, which is the source for most downloads. About 3.5% of downloads result in sales. This figure is much less than the Windows version of the same app, despite Mac users’ reputation for being more willing to pay for software. The iPhone app did not appear at all initially when searching for “Caption Photos” in the App Store. After 6 months it began appearing as result number 140, after it had 360 downloads. This poor ranking performance is probably because “Caption Photos” is a very popular keyword used by many apps, including those that only caption videos. It has had very few downloads and sales, despite Apple Search Ads and Apptimizer campaigns. The number of downloads increased dramatically during the Apptimizer campaign between Jan 24 and Feb 2 (as they were purchased) but the change in ranking from these downloads did not result in any sales, perhaps because no installs were purchased. The Apple search ads campaign (which resulted in the app being shown as an ad 1 in 50 times when the search phrase “Caption Photos” was used) did not greatly affect downloads or sales. A Facebook ad campaign to show a link to the app whenever “Genealogy” or “Genealogy Software” was searched for was also unsuccessful, and very expensive, as Facebook charges by impressions rather than clicks. Additional backlinks to the web site were purchased in September 2022 from Links Management in an attempt to improve the web site Google ranking, but this did not appear to have any effect on web traffic.

Mac and Windows users contacting me with problems have had a wide range of experience level – from completely naïve to former programmers. Most have been from the US, which reflects the geographic distribution of sales. There have many downloads to non-English speaking countries but very few sales.

Some results from the Mac and iPhone Apps are shown below:

On balance, developing for Apple platforms was not a good commercial decision, as the advantages of a mostly captive audience (completely captive in the case of the iPhone) do not seem to result in higher rates of downloads or sales. Competition for iPhone apps is so intense that niche products without massive advertising budgets are unlikely to succeed. The same is likely to apply to Android phone apps, which anecdotally have a less rigorous review process. My experience is that advertising and backlink purchase for any platform are not effective in increasing sales for niche software.

Simon Kravis runs Aleka Consulting, a small software and consultancy company in Canberra, Australia specializing in information management and offering a number of software products. He has mainly developed scientific and engineering programs, starting in the era of paper tape.

Too many software products fail because no-one bothered to do basic market research. This is a guest post from Edmundo López B. with some useful advice on finding a viable market niche before you start creating your product.

The process of building software for a niche market is more or less well documented online. The basic workflow I found is (for example here or here):

choose some niche (with potential)
find out the problems that you can solve in that niche
create a product to solve the problem
sell it
enjoy life :-)

Here are three things you can look for when asking people about their problems.

Ask for the painful tasks that they do, not for the problem you can help with

The people I first talked to were persons that I already knew, so my pitch for them was: “Hello. As you know I’m a software engineer. I’m looking for problems to solve. I want to build software and sell it. And, if I solve a real problem, I’m sure people will pay for it. I was wondering if there is some problem in your business where you need some help. I could create some software, solve your problem and then sell it. I can help you with your problem and you will help me to find my problem.”

The first response was always positive however, everybody I talked to started to look at a problem they thought could be solved by a computer. The problem with that is that people’s vision of computers is very limited. First, some people limit the software I can build to desktop applications or some platform they know well. Second, they try to find problems to give you, and not the problems they really have. For example: one of my interviewees said to me that she needed some kind of tracking system for the expenses of her very small business (a small farm producing eggs). I told her: “Wow, that sounds like a problem I could solve, how are you solving that problem right now?.” She told me: “I’m not, I’m busy bootstrapping the whole business right now. But later I’d certainly like to have something for that.” Of course, if she is not solving that right now, then that is not a real problem. She sort of made that problem up to give an answer to my question.

People have real problems but sometimes they don’t even know they could tackle that problem with a computer. So, the lesson here is that you have to get them to tell you their real problems. Even the ones they don’t think that could be solved by a computer. You are the computer expert, not the people you interview, so you need to find out the real problem out there. Also it doesn’t have to be a problem from the future, it has to be an actual problem now. The question that I found works best is the following: Tell me about your day and what activities are the most tedious and boring to do, but do not add much value to your business. (I’m not the first to come up with this question, but I don’t remember the source, sorry.)

Look for their existing solution and ask what is wrong with it (the Excel spreadsheet)

From the people I interviewed, 2 of them had an Excel spreadsheet that solved their problem in a way that was not the best, but did the job. The third one had plans to solve her problem with an Excel spreadsheet in the future. Joel Spolsky talks about how Excel and other horizontal software are nothing more than glorified data structures. It is true, you can do almost anything involving simple mathematics and tables of data within Excel. Keeping track of costs, sales, etc. are a perfect match for it.

The common engineer will say: “If there is already a solution for that, why roll my own?” The entrepreneur will just ask what isn’t possible with the existing solution and think of ways of improving that. The existence of the Excel spreadsheet is a clear sign that there is a computing problem that can be solved in a better way. I can give you an example. Two of the persons I interviewed showed me their Excel spreadsheets (an architect and an event manager). A common problem was being able to slightly change some prices in a budget and immediately be able to show the old and the new price to the client. This kind of information is gold to the person creating an application. This is something they use, and if you can save them time using it, you can add value to their businesses.

If there is no Excel spreadsheet, I just try to find software on the net that does what they need. If there is something really good on the market, I don’t want to compete with them. If you are wondering why didn’t I let them do the search, the answer is simple: they do the search using the traditional channels, colleagues and networks of peers; I focus on the Google search. I’m a developer, I can Google for software in a much better way than they do. It took me an hour to do a research on software for architects. Then you can explain to them the pros and cons of the solutions, help them to sign up for a free trial and tell them if their set-up is supported. The golden rule is to be really helpful. It is true that you might end up finding a customer for someone else. But if there is not a good solution, you are finding a niche for yourself.

Do some simple mathematics to see if the problem is worth solving

My last tip is about the financial aspect. Let us say that you finally found a problem that you can solve. It is painful and there is no solution in the market that can solve it in the way people in that niche want. The question to ask now is: “What are people willing to pay for something like this?” I cannot give you an exact answer but I can tell you that it depends on the value you add to your client’s business.

What you want to know is:

How much time does it take monthly to do the task you are solving?
How much money could be earned in the same amount of time?
How much faster would it be to do the same task with your solution?

The basic idea is to convert saved time to saved dollars. Of course, if your solution saves dollars monthly, it becomes an investment for the business. My limited experience showed me that saving people money and pain gets them really excited.

I can give you an example from my interview with the architect. Once again, the problem was something he was solving with an Excel spreadsheet. I asked him how much time did it take and he told me at least three days. Three days of architect’s time means a lot of money. So, if you can help him solve the problem in one day, you are not only saving his money but avoiding pain (because the problem was painful to solve, but it needed to be done).

Conclusion

Now it’s up to you. Try to put these in practice, and find a niche to build your first product. Please share your thoughts and remarks in the comments.

Edmundo López B. is a PhD student in computer science at the University of Geneva and an entrepreneur in the making. He loves building things, learning new stuff, and playing classical guitar. He decided to make the jump directly from school to entrepreneurship. He blogs at edmundo.lopezbobeda.net.